Supply Chain is a system that focuses on effective management along with the various steps involved in the producing and delivering of a product or service. The system starts right from supplying of the raw material, manufacturing of goods, delivery of goods at various distribution channels, and ends to the consumer. Supply chain management focuses on all the aspects related to identification of customer needs like preference towards product or services and how to keep the customers happy and satisfied. Supply chain management system helps the companies in reducing the cost and time in a significant way.
1. It is very important to keep company’s objectives and goals in the mind while deciding the targets of the supply chain. Once a complete supply chain metrics is in place, measurement of various processes is also required to ensure the effective performance of supply chain metrics. Selection of measurement metrics should be done very carefully so that they are able in measuring the actual performance. Few companies use basic methods like X% improvement over the last years which is not an effective measurement. Measurement metrics should be very specific, measurable, achievable, realistic and time bound.
Measurement metrics helps in analyzing the effectiveness of supply chain metrics. It informs us that the processes are going in right direction and company will be able to achieve its objectives. Measuring metrics ensure that all the employees and management associated with the project perform their tasks effectively and timely. All the employees associated with supply chain metrics are given certain targets with the deadlines. Employees also agree upon the targets set by the management. This process motivates employee to complete the task in the given time and contributes towards the growth of the organization. Measurement metrics is also important in case of performance appraisal, if employees complete all the tasks and achieve the set targets; he receives good performance rating during appraisal process.
Customer is very important entity for any organization. The success of an organization depends upon the customer, so it is very important for the organization to keep its customers satisfied and happy. The Organization should design supply chain metrics in a way so that it achieve the highest customer satisfaction level and ensure repeat purchasing of products and the services.
Measurement metrics provide help in assessing customer satisfaction from the product or services. Supply chain metrics is designed in a way that it does not deviate from the customer policy of the organization. Supply chain management helps in improving the customer satisfaction and to provide customer value. Measurement metrics provides the details on how successfully company achieved the desired customer satisfaction level and in providing customer value.
Many companies use customer satisfaction surveys to assess the performance of company. They assess the performance on different indicators to know the strongest and weak points of the organization. To deliver excellent value to the customers, it is very important to improve upon weak areas without losing on the strong areas.
Over all measurement metrics helps companies to focus on its customers by providing excellent services. It also helps company to achieve its goal by defining targets for employees and modifying processes which require improvements.
2. A well designed supply chain metrics increases the performance of organization by aligning various processes like identifying best suppliers, manufacturing of the products, identifying need of customer, defining target segment, inventory management, keeping update on changing needs of customers and competitors, delivery of the product and after sales services. It helps in providing better services and products at lesser cost. Sometimes organizations do not implement supply chain metrics properly or designed metrics that does not cover all the areas. The inappropriate supply chain metrics may be ineffective to improve the processes. In that situation supply chain metrics does not yield the desired results and sometimes it hampers the growth of the organization. An effective metrics that is designed keeping all the different processes, company’s objective and customer policy in mind, need to replace the inappropriate supply chain metrics.
The major reasons for designing inappropriate metrics are; management understands supply chain metrics as a system which focuses on only logistic parts and not the whole system. Further the measurement metrics also focuses on to evaluate the monetary benefits from the supply chain.
While designing new supply chain metrics the organization should consider all the processes and not only the logistic processes. Measurement metric should also evaluate various benefits like increased customer satisfaction, enhanced employees performance, new initiatives and innovations, competitive advantages gained after implementing metrics etc. instead of measuring only profit.
The inappropriate supply chain metrics are unable to capture the untapped opportunities and also not performs to gain advantages over competitors. This result in customer dissatisfaction, loss of customers, stakeholder’s value and ultimately it causes loss to the organization. So it is very important to design supply chain metrics in a very effective manner so that it cover all the areas, third parties, customers and other stakeholders. An effective and appropriately designed supply chain metrics help the company in improving overall performance of the organization, reduce the cost and increases the profit.
References
Birgit Dam Jespersen and Tage Skjott-Larsen. (2005). Supply chain management: in theory and practice. Copenhagen: Copenhagen Business School Press.
Douglas M. Lambert and Terrance L. Pohlen. (2001, 18 December). Supply Chain Metrics. Retrieved December 24, 2011, from www.revistavirtualpro.com: http://www.revistavirtualpro.com/files/TIE04_200702.pdf
Mentzer, J. T. (2001). Supply chain management. California: SAGE.
